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SuperScalar: Laddered Timeout-Tree-Structured Decker-Wattenhofer Factories

SuperScalar: Laddered Timeout-Tree-Structured Decker-Wattenhofer Factories

Original Postby ZmnSCPxj

Posted on: September 16, 2024 20:08 UTC

The SuperScalar mechanism addresses the Last-Mile Problem (LMP) in the Bitcoin Lightning Network by providing a novel construction that allows for efficient, offchain liquidity allocation to new users without requiring blockchain consensus changes.

This is achieved through a combination of Decker-Wattenhofer decrementing-nSequence mechanisms, timeout trees, and laddering strategies. The approach is designed to overcome several challenges, including ensuring security against fund theft by the Liquidity Service Providers (LSPs), maintaining operation despite ossification of the Bitcoin blockchain, and providing resilience against the offline status of some end-users.

Decker-Wattenhofer mechanisms facilitate offchain consensus on state changes among multiple users without each change needing to be recorded on the blockchain. This method contrasts with the Poon-Dryja mechanism by supporting any number of parties and offering a finite, albeit extendable, number of state changes through chaining mechanisms. It relies on a sequence of transactions with decrementing nSequence values for state progression, which ensures that the latest state can confirm before any previous state in case of unilateral closure.

Timeout trees introduce a structured way to manage multiple channels under a single onchain UTXO, where transactions form a tree that enables efficient exits and updates. Each node in the tree represents channel agreements among participants, with the LSP capable of unilaterally closing channels after a specified timeout. This structure supports scalability by minimizing the impact and cost of individual user exits.

Laddering, inspired by financial products like certificates of deposit, involves creating multiple Decker-Wattenhofer mechanisms with staggered terms. This strategy gives LSPs flexibility in managing their investments in liquidity provision, potentially increasing returns through fees while offering users opportunities to adjust their liquidity needs over time.

The SuperScalar construction combines these elements into a scalable, flexible system for managing lightning network liquidity. By organizing users into timeout-tree-structured Decker-Wattenhofer channel factories and employing laddering of these structures, it provides a solution to the LMP that is secure, efficient, and adaptable to the dynamic nature of Bitcoin user activity and network conditions.

Practical considerations for implementing this mechanism include strategies for incentivizing user onlineness, grouping clients by likely online times to improve the responsiveness of liquidity allocations, and deciding on the appropriate structure of the trees to balance between the efficiency of updates and the costs of unilateral exits. These considerations are crucial for the practical deployment and success of the SuperScalar mechanism in addressing the liquidity challenges of the Bitcoin Lightning Network.